The case involves an appeal filed by Deepshikha Negi against the Income Tax Officer (ITO), Ward-43(5), New Delhi, concerning the assessment year 2016-17. The main issue in the appeal was the disallowance of Rs.4,56,707 on account of derivative transactions, which was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)].
Deepshikha Negi, an individual taxpayer, filed her income tax return for AY 2016-17 on July 30, 2016, declaring a total income of Rs.2,63,170. The case was selected for limited scrutiny under the Computer-Assisted Scrutiny Selection (CASS) to verify whether the investment and income relating to securities (derivative transactions) were duly disclosed. Subsequently, the Assessing Officer (AO) issued a notice under Section 143(2) of the Income Tax Act, 1961, followed by a questionnaire and notice under Section 142(1). However, the assessee did not comply with these notices.
Due to the non-compliance, the AO invoked the provisions of Section 144 of the Income Tax Act, determining the total income of the assessee at Rs.8,25,912, based on 0.5% of the total derivative transactions amounting to Rs.16,51,02,530. The AO disallowed Rs.4,56,707, which led to the increase in the total income assessed.
Aggrieved by the AO’s order, the assessee filed an appeal before the CIT(A). However, the CIT(A) noted that the income tax return was filed by the husband of the assessee, and the address provided in Form No.35 was incomplete. Consequently, the notice sent by the CIT(A) via speed post was returned unserved with the postal remark ‘incomplete address.’ Due to the lack of response and absence of any details from the assessee, the CIT(A) dismissed the appeal without deciding on the merits of the case.
Unsatisfied with the CIT(A)’s decision, Deepshikha Negi appealed to the Income Tax Appellate Tribunal (ITAT). The primary argument from the assessee’s side was that the CIT(A) had dismissed the appeal without examining the merits, solely due to the non-appearance of the assessee. The assessee’s counsel requested that the case be remanded to the CIT(A) to allow an opportunity for the assessee to present her case.
The Departmental Representative (DR) had no objections to this request.
After hearing the arguments, the ITAT, led by Shri R.K. Panda, Accountant Member, considered the totality of the facts and deemed it appropriate to restore the issue to the file of the CIT(A). The Tribunal emphasized that in the interest of justice, the assessee should be given one more opportunity to substantiate her case before the CIT(A).
The Tribunal directed the assessee to appear before the CIT(A) and present her case without seeking any adjournments under any pretext. The CIT(A) was instructed to decide the issue as per the facts and law after considering the submissions made by the assessee. The Tribunal also noted that if the assessee failed to comply, the CIT(A) would be at liberty to pass an appropriate order as per law.
The ITAT allowed the appeal for statistical purposes and restored the case to the CIT(A) for a fresh decision. This case underscores the importance of due process and the right of the assessee to be heard, especially in cases where the initial appeal is dismissed due to procedural issues rather than substantive examination of the merits.
In conclusion, Deepshikha Negi’s appeal was allowed for statistical purposes, with the ITAT remanding the case back to the CIT(A) for a fresh examination, ensuring that justice is served by providing the assessee with a fair opportunity to present her case.
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